Running the Business · Part 3
Subcontracts with GCs: the twelve clauses to read, what to strike, and what to negotiate
Lesson 2.3 covered how to get onto a general contractor's list and the four pressure points in every subcontract. This lesson is the full review: the twelve clauses a plumber reads before signing, in the order they appear in most GC forms, with the California rule that governs each one, what the law already gives you so you can leave the clause alone, what you should strike because the law makes it void anyway, and what you should negotiate because nothing protects you but the negotiation. It ends with the subcontract review checklist the template set carries, so the review takes twenty minutes and happens every time.
What the full lesson covers
- Leave alone, because the law overrides them: pay-if-paid (unenforceable); payment timing slower than seven days after the GC is paid (7108.5 controls); indemnity for the GC's own negligence (Civil Code 2782 voids it, and on residential work anything beyond your scope); any clause waiving your lien or stop-notice rights in advance (Civil Code 8122 voids it).
- Strike or narrow: broad "all plumbing per plans" scope without your scope sheet; open-ended "as directed" change orders without a written process; back-charge clauses with no notice; liquidated damages with no schedule float; "no damages for delay" that reaches delays the GC caused.
- Negotiate: retention percentage and release trigger; insurance limits and endorsements you can actually buy; warranty period and start date; termination for convenience with payment for work done and materials ordered; dispute venue.
- An attorney's fee clause is reciprocal under Civil Code 1717; a one-sided clause protects you too, so it is not the one to fight.
- Send the preliminary notice on day one regardless of what the subcontract says about it.
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More lessons in Contracts and Getting Paid
- 1The home improvement contract (B&P 7159): every required element, the exact notices, and the three-day right to cancel
- 2The deposit cap: $1,000 or 10 percent, whichever is less, and progress payments that cannot exceed the work. CSLB's most common citation
- 3Service and repair contracts (B&P 7159.10): when the short form applies, what it must say, and how a service call falls out of it
- 4Subcontracts with GCs: the twelve clauses to read, what to strike, and what to negotiateYou are here
- 5Change orders: written, signed, before the work. Every time. Why verbal ones end in CSLB complaints
- 6Mechanics liens I: the 20-day preliminary notice. Miss it, lose your rights
- 7Mechanics liens II: recording deadlines, the 90-day foreclosure clock, the four statutory release forms, stop payment notices, and payment bonds on public work
- 8Collections: demand letter, lien, small claims, attorney. When each is worth it, and the one thing that makes all of them impossible
- 9Taking payment: cards, ACH, checks, cash, financing partners, and getting every dollar into the right account
- 10Case: the job that went unpaid. Where the contractor lost lien rights and how to have kept them
- 11Case: the deposit that became a citation
- 12Case: the change order that was never written
- 13Template: the home improvement contract, with every B&P 7159 notice verbatim
- 14Template: the service and repair contract (B&P 7159.10), one page, with the notices verbatim
- 15Template: the change order, one page, signed before the work
- 16Template: the 20-day preliminary notice, with the proof-of-notice declaration
- 17Template: the four statutory lien waiver and release forms (Civil Code 8132 to 8138), verbatim
- 18Template: the demand letter, homeowner version and general contractor version
- 19Template: the subcontract review checklist. Twelve clauses, three boxes each